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March 2, 2020

ATTORNEY GENERAL RAOUL DEFENDS STATES’ RIGHTS TO REGULATE THE RISING COST OF PRESCRIPTION DRUGS

Chicago — Attorney General Kwame Raoul today joined a bipartisan coalition of 46 attorneys general in filing an amicus brief in the United States Supreme Court supporting states’ rights to regulate and address the rising cost of prescription drugs.

In Rutledge v. Pharmaceutical Care Management Association, Raoul and the coalition argue that in order to protect the well-being of consumers, states must regulate pharmacy benefit managers, also known as PBMs. PBMs act as middlemen between pharmacies, drug manufacturers, health insurance plans, and consumers. Their position gives them some power to manipulate the market as they develop and maintain prescription drug formularies, contract with pharmacies, negotiate discounts with drug manufacturers, and process and pay prescription drug claims.

“Regulation of the prescription drug market, including pharmacy benefit managers, is a critical tool in protecting residents and addressing issues related to access and affordability of prescription drugs,” Raoul said. “I am committed to continuing to fight on behalf of consumers to stop unfair conduct by drug companies.”

Today’s brief supports the state of Arkansas’ position that federal law does not prevent states from regulating PBMs. In 2015, the state of Arkansas implemented a law that regulated the reimbursement rates PBMs pay to pharmacies. Under the law, PBMs must raise their reimbursement rate for a drug if that rate falls below the pharmacy’s wholesale costs. The law also created an appeals process for pharmacies to challenge these reimbursement rates. The law was challenged by the Pharmaceutical Care Management Association, a PBM trade association, which argued that the Employment Retirement Income Security Act prevents the state of Arkansas from implementing the law. Arkansas has asked the Supreme Court to reverse a lower court judgment that held the law invalid.

In today’s filing, Raoul and the coalition argue that state laws regulating pharmacy benefit managers are not restricted by federal law. Regulation is critical to the states’ ability to improve the transparency of prescription drug marketplaces and to protect consumers’ access to affordable prescription drugs, especially those in underserved, rural and isolated communities. To date, nearly every state has enacted laws that regulate PBMs in some way, including Illinois which requires regular disclosure of pricing information from PBMs. In addition, the attorneys general assert that the regulation of pharmacy benefit managers promotes healthcare access and affordability for residents.

Joining Raoul in the brief are the attorneys general of Alabama, Alaska, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin.

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